Understanding GST Tax Codes - Part 1

This is a follow-up on an earlier article entitled Knowing the 23 Tax Codes. Many asked why are tax codes important. This is because the accuracy of the figures in the GST-03 return that you submit to the Royal Customs Malaysia (RMC) on monthly or quarterly basis relies on the tax codes you punched into your accounting system. For example, tax code TX refers to goods and/or services purchased from GST registered suppliers and eligible to claim input tax credit. Then system will then post this figure to item 6(a) and 6(b) of you GST-03 form.

Let's  look at the first tax code for Purchase

TX

This tax code refers to goods and/or services purchased from GST registered suppliers. The goods or services are used or are to be used for the purposes of any business carried on or to be carried on by the taxable person.

Purchase includes purchase of raw materials, trading goods, direct overheads such as electricity, transport, water, and indirect overheads such as rental, stationery, domestic air ticket and include purchase of fixed assets (capital goods) such as lorry, machine, office equipment.

Source document: Your supplier's tax invoice.

Description

Dr.

Cr.

Tax Code

Local credit purchase with GST	Purchases
	GST - Input		TX
		Trade Payables

Local cash purchase with GST	Purchases
	GST - Input		TX
		Bank / Cash

Expenses with GST	Expenses - Rental
	GST - Input		TX
		Bank / Cash

Purchase of assets with GST	Assets
		GST - Input Tax	TX
		Bank

NR

Use this tax code if you have purchased goods and services from non-GST registered supplier/ trader.

Source document: Your supplier's invoice. Non-GST registrants are NOT ALLOWED to issue tax invoices. It is an offence.

Description

Dr.

Cr.

Tax Code

Expenses from local non-GST registrant	Expenses		NR
		Trade Payables - NR1

Part 2: Purchase of imported goods and zero-rated purchase

Your turn to comment or suggest ..... :)

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